The use of credit cards for many types of transactions is already commonplace, and is steadily increasing as society moves progressively to a cashless monetary system. The proliferation of the use of credit cards, however, has been met with a corresponding proliferation in the methods by which unscrupulous persons may use credit card information to engage in fraud or theft.
For example, one typical credit card transaction involves a person who uses a telephone credit card to make a telephone call at a public telephone. The transaction sequence usually requires the user to first dial an access number to make contact with a long distance carrier. The access number is generally, publicly available, since it is distributed to all subscribers to the carrier's service and is sometimes even displayed in the public telephone area. After receiving a confirmation signal, the caller then enters a customer specific, account number, which is made up of a series of numerals often printed on the credit card for ease of user access. Unlike the access number which is public, the account number should be kept secret by the card owner, given that it is used by the carrier to determine if a valid account number has been presented when the service request is initiated. Of even greater importance to the card holder, the account number usually identifies the account to which the requested telephone service will be billed.
Understanding that someone who has the telephone account number can use that number to place unauthorized calls, a practice has grown up by which thieves have devised different methods by which they gain access to the account numbers of legitimate card holders. One such practice is referred to as "shoulder surfing", whereby the thief watches, sometimes by means of binoculars, and memorizes the customer unique, account number entered by a legitimate card holder. Modern, public telephone areas in airports, train stations, shopping malls, and the like, make the true card owners particularly vulnerable to this practice given that the design of many public telephone areas typically permit members of the public to freely move around and behind the caller. Thus, someone in a publicly accessible area could have a clear view of the account number on the card or entered on the telephone key pad during the transaction, especially if the caller inadvertently neglects to guard the secrecy of the account number.
Yet another example of the means by which a thief may gain access to a legitimate card holder's account number may involve a typical credit card purchase from a retailer. During such a transaction, the card holder's account number is exposed to the retailer's clerk processing the transaction. Additionally, if the transaction is conducted with the card holder present in person, there is typically paperwork, such as a hard copy receipt, which is generated during the transaction and which contains the account number. Frequently, carbon paper inserts, which are between the receipt paperwork, are discarded in an unsecured manner after the card holder provides an authorization signature, even though those carbon paper inserts may contain the account number of the customer.
Thus, an unscrupulous clerk could later attempt to use the account number to engage in fraudulent transactions. Alternatively, another party who gains access to the discarded carbon paper could likewise attempt to use the account number to engage in a fraudulent transaction. And finally, a so called `shoulder surfer` could observe the transaction and obtain the account number.
What is needed is a method and apparatus by which credit card transactions can be made more secure against fraud and theft. To the extent that credit cards are mass produced, the security approach must be adapted for implementation on a wide scale, which also suggests that it must not be prohibitively expensive. The approach must take account of existing transaction equipment which is available now and in the near future. For example, most public telephone systems have touch tone key pads, but relatively few have the newer technology, card readers which read an electronic strip on the credit card. Likewise, home telephone systems, which can be used for conducting credit card transactions, are highly unlikely to include a card reader system. Finally, the security approach must be reasonably simple to use by the card holder, as significant increases in the complexity of use will reduce the desirability of the security system.